Sean O'Shaughnessey on July 24th, 2014
Share on StockTwits
Share

lottery photoPerhaps good news has come your way and you just won the lottery. Maybe it wasn’t the big multi-million dollar payoff, but instead a smaller prize that still requires you to maintain employment. Maybe you just received an inheritance from a beloved family member. What should you do now? (Hint: it isn’t going on a shopping spree).

The stories of blowing this windfall of winning the lottery or receiving an inheritance are legendary. Everyone has heard of true or imaginary receivers of windfalls that are now dead broke.

I sincerely hope that you win the lottery. I just hope that you are not playing it as an investment but rather as pure entertainment. Playing the lottery is an incredibly bad investment, therefore, please do not take this article as an endorsement of playing the lottery to get rich. It should be purely done as a method of entertainment and NOT the way to prepare for retirement.

But perhaps you received a ticket as part of a Christmas gift and won $40,000. Maybe your Great Aunt Sally passed away at the age of 104 and left you an inheritance of $25,000. How should you deal with the windfall of “found” money?

Make a donation of a portion of the inheritance

The very first thing you need to do is to give 10% of this inheritance to one or more charities. I don’t care which one you prefer, but I have a list if you are looking. Giving away part of this money is imperative. You just received a gift, and you should help to take care of your fellow man by giving to someone that is less fortunate than you. Make this donation within one week of receiving the inheritance – do not wait. You won’t miss the money, and if you think of helping others first, you will be unbelievably rewarded in good will.

Make one special purchase with the inheritance

You now need to buy ONE thing that is slightly extravagant just for you and your immediate family. The luxury item should not be more than 20% of the lottery winnings that you just received. If you just received an inheritance, make it something that is permanent in your home so that you will always remember the deceased when walking by the item.

When my wife lost her grandmother, she received many pictures and a cedar chest that is still in our bedroom. She also received a small amount of money that we used to help with the purchase of a dining room table. Now whenever we host a dinner at that table, her grandmother is in our thoughts and is part of that celebration.

My grandfather was a poor farmer in southern Illinois. When he passed away at 93 after years of frugal living, I purchased a grandfather clock that sits in the foyer of our home. Now, every 15 minutes, I am reminded of the things that great man taught me regarding the value of planning and understanding the markets.

You now have 70% of your inheritance

I now give you a choice. I don’t know your personal situation so I cannot give definitive advice, but I can give suggestions that fit nearly every financial condition.

1. Do you have short-term debt that has an interest of over 7%?

In this case, use as much of the 70% as you need to pay off that debt. Nothing is a better use of that money than to get rid of that debt. Pay it NOW! Don’t wait for your cousin to ask you for a loan. Don’t wait for that get-rich-quick scheme from you brother-in-law. PAY OFF YOUR EXPENSIVE DEBT!

2. If you don’t have expensive debt, do you have 20% equity in your home?

There are a lot of great things that happen when you have 20% equity in your home. You will probably get relief in some fees from your bank when you go over this magical number. Also, bankers are much more willing to have you refinance for a better rate if you have 20% equity. So use enough of your windfall to achieve this ratio.

3. If you have anything left from the inheritance, it is time to save for your retirement.

The simple fact is that you don’t need the money that you just won. This money is a windfall. Don’t leave it around where you can spend it. Put it into a special investment account and make your money work for you. If you use the money to buy STUFF then you will eventually not have the STUFF, and you will have no money. This behavior is terrible. You need to invest the money in great companies.

If you don’t know how to invest in the stock market, then this site is an excellent resource. I include a Watch List that has my current favorite investments. You can also buy my book, The Confident Investor, and that will guide you through the process of learning how to find great companies and successfully invest in them. You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

I hope this helps you deal with winning the lottery or receiving an inheritance. Remember, it took your loved one many years to accumulate the wealth and share it with you. Don’t waste the money in 18 months. Honor the person that spent their life accumulating a bit of extra cash and thought enough of you to let you have it when they didn’t need it. It was a gift for you, so say “Thank you!” and use it suitably.

Photo by Montage Communications

Share
Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Sean O'Shaughnessey on July 24th, 2014
Share on StockTwits
Share

This information was calculated on Jul 24, 2014 and is based on the closing value of the most recent trading day which may not be today.

This information is based on the Yahoo Historical Pricing and is only as good or as current as that data Click here to read the rest of this article

Share
Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Share on StockTwits
Share

Company name Helen of Troy Limited
Stock ticker HELE
Live stock price (HELE: 55.86 -0.24 -0.43%)
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Fair
EPS growth Poor
P/E growth Good
EBIT growth Fair

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $65.39
Target stock price (averages with growth) $54.41
Target stock price (averages with no growth) $36.77
Target stock price (manual assumptions) $59.71

The following company description is from Google Finance: http://www.google.com/finance?q=hele

Helen of Troy Limited is a global designer, developer, importer, and distributor of an expanding portfolio of brand-name consumer products. The Company operates in three segments: Personal Care, Housewares and Healthcare / Home Environment. Its Personal Care segment’s products include electric hair care, beauty care and wellness appliances; grooming tools and accessories; and liquid, solid- and powder-based personal care and grooming products. Its Housewares segment provides a broad range of consumer products for the home. Product offerings include food preparation and storage, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on health care devices. In July 2014, Helen of Troy Ltd acquired Healthy Directions, LLC and its subsidiaries (Healthy Directions), as well as other health products sold directly to consumers.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in Helen of Troy Limited as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of Helen of Troy Limited calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.

Share

Tags:

Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Sean O'Shaughnessey on July 23rd, 2014
Share on StockTwits
Share

This information was calculated on Jul 23, 2014 and is based on the closing value of the most recent trading day which may not be today.

This information is based on the Yahoo Historical Pricing and is only as good or as current as that data Click here to read the rest of this article

Share
Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Share on StockTwits
Share

Company name EMC Corporation
Stock ticker EMC
Live stock price (EMC: 28.80 +0.05 +0.17%)
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $25.15
Target stock price (averages with growth) $33.92
Target stock price (averages with no growth) $31.55
Target stock price (manual assumptions) $26.58

The following company description is from Google Finance: http://www.google.com/finance?q=emc

EMC Corporation (EMC), and its subsidiaries develop, deliver and support the Information Technology (IT) industry’s range of information infrastructure and virtual infrastructure technologies, solutions and services. The Company manages its business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure provides a foundation for organizations to store, manage, protect, analyze and secure ever-increasing quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. Its EMC Information Infrastructure business consists of three segments: Information Storage, Information Intelligence and RSA Information Security. In July 2014, EMC acquired TwinStrata Inc, a Natick-based developer of cloud-integrated storage solutions.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in EMC Corporation as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of EMC Corporation calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.

Share

Tags:

Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Sean O'Shaughnessey on July 22nd, 2014
Share on StockTwits
Share

ID-10013889On my weekly posting covering the current best stocks according to my indicator analysis, I frequently discuss the 52-week high. A reader recently asked me why I consistently mentioned this metric.

I have discussed earlier that being a successful and confident investor requires that you be able to interpret a stock chart. You don’t need to be a technical investor, but you need to know some of the basics.

One of those basics is that you need to know resistance levels. Resistance levels and support levels are simply the changes in direction that the stock has taken lately. When a stock starts going up, pauses, and then starts to go back down then it has set an upper-resistance level. Similarly, when the stock goes down, pauses, and starts going back up again, then it has set a support level. It is the nature of stock investors to fear these levels as stocks approach them again. You will find a natural hesitancy to go above the resistance level or below the support level in the following weeks and months.

The 52-week high is a natural resistance level that is quite significant and often scares investors. When the stock does go above a 52-week high then investors are unsure where it can go. They often become hesitant to continue to invest. You may also find that the stock will grow rapidly as there are no immediate resistance levels in the near future.

The strength of the 52-week high resistance is even stronger if it is relatively close to today’s date. If the 52-week high was 51 weeks away then that the resistance is not nearly as strong as if it is only two weeks away.

It is important to remember that some investors purchased the stock at that 52-week high. Therefore, if there are no other detracting events or news, the stock is worth that 52-week price. After the stock has pulled back from its 52-week high and paused at a lower range for some amount of time, there is a natural attraction for the stock to return to that peak and or exceed it.

For this reason, my weekly indicator thoughts often reference the amount of time since the 52-week high. I also mention the stocks eagerness or hesitancy to reach the peak number. These time-frames and actions are an important tool to understand the emotion of the investor community.

My weekly investor thoughts are available for everybody to read on this site. However, in order to see all of the details of the comments you will have to own my book, The Confident Investor.  You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

Image courtesy of Idea go / FreeDigitalPhotos.net

Share
Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury
Sean O'Shaughnessey on July 22nd, 2014
Share on StockTwits
Share

This information was calculated on Jul 22, 2014 and is based on the closing value of the most recent trading day which may not be today.

This information is based on the Yahoo Historical Pricing and is only as good or as current as that data Click here to read the rest of this article

Share
Please read the disclaimer before using any information on this site.

To learn how to retire with enough money to live in luxury during your retirement and enjoy the good life, download the free whitepaper Retire In Luxury